By Marcus Leach

Mark Hoban MP, financial secretary to the Treasury, has announced new rule changes aimed at helping small to medium sized businesses (SMEs) gain better, more cost effective, access to equity finance.

The two rules changed, part of the EU Prospectus Directive, were due to come into effect next year, but were brought forward to July 31st 2011, meaning SMEs can take advantage of the new measures of as of today (Monday).

SMEs will now be able to raise equity finance of up to €5m, doubled from €2.5m, before a costly prospectus must be produced. Further to that SMEs will be able to target a wider range of investors, the figure up to 150 from 100.

It is believed that the increased efficiency of access to equity finance will save UK SMEs in the region of £12 million per year.

"Reducing the regulatory burdens faced by business is vital in making the UK the best place in Europe to start, finance and grow a company," Hoban said.

"In order to play their part in the wider economic recovery, small businesses have to be able to access the finance they need - that includes making it easier for such businesses to tap into capital markets."

John Walker, National Chairman of Federation of Small Businesses, welcomed the move.

"More small firms should look at equity finance as an alternative route to accessing credit, and these simple changes will help firms who are looking to grow and invest," he said.

"Extending the number of investors and increasing the prospectus value will help more small businesses access equity finance and show there are more options than just going to the bank for credit."

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